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The New Deal Dilemma


February 19, 2011
Toledo Chronicle, Tama News-Herald
In Our Country: The Shaping of America from Roosevelt to Reagan, Michael Barone wrote that “the New Deal changed American life by changing the relationship between Americans and their government.” President Franklin D. Roosevelt’s New Deal, was designed to fight the Great Depression, while bringing about social and economic reforms through the federal government. With the severity of the Great Depression, Roosevelt and other progressives believed that the federal government must build on the administrative state by providing economic security by further regulating the economy and building a welfare state through Social Security. The emergence of the welfare state has grown tremendously in the aftermath of the New Deal, especially under President Lyndon B. Johnson’s Great Society. As a result the nation has grown accustomed with the largess of government, but today, the nation is facing a fiscal crisis that demands a solution rooted in constitutional limited government rather than New Deal liberalism.

President Barack Obama and Democrats in Congress are pushing an agenda similar to that of Roosevelt, which consists of Keynesian-style stimulus programs, universal health care, financial reform, and an increase in the regulatory activity over the economy. Recently, the Administration has called for renewed “investment” in the economy by labeling it our “Sputnik” moment.

The federal government, just as with many states and localities, is in a fiscal crisis. The Congressional Budget Office (CBO) is projecting a $1.5 trillion deficit for 2011 if spending is not curbed. This is on top of the $1.4 trillion deficit in 2009 and $1.3 trillion deficit in 2010. The national debt currently stands at over $14 trillion and unfunded obligations of entitlement programs are estimated to be at least $60 trillion or more. Entitlements already consume a majority of the federal budget.

Reforming entitlement programs such as Social Security and Medicare, and eliminating government spending will be necessary to solve this fiscal crisis. Cutting government spending and reforming entitlements will not be an easy task for policymakers. President Ronald Reagan was the last President to directly challenge the New Deal philosophy, and although Reagan accomplished many policy objectives, the wave of big government continues.

Currently a number of policy ideas have been offered in regard to reforming entitlements and cutting government spending. Representative Paul Ryan’s “Roadmap” is one example of a serious policy proposal to reform entitlements, while other policymakers have proposed plans to reduce government spending. The battle to resolve the fiscal crisis will not just be an economic debate, but also a debate between the conservative and New Deal philosophies of government. The legacy of the New Deal is still ingrained in our culture, but the only solution to the impending fiscal disaster resides in returning to constitutional principles.

The views expressed in this column are those of the author and not necessarily those of the Public Interest Institute. They are brought to you in the interest of a better informed citizenry.

John Hendrickson is a Research Analyst at the Public Interest Institute in Mount Pleasant.



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